Intellectual Capital and Investment Opportunity Set

Abstract

The purpose of this article is to investigate empirically the effect of intellectual capital on investment opportunity set in Malaysia for the period of 2006-2011. This study examined the relationship via a panel data and fixed effect regression models. Pulic’s Value Added Intellectual ‎Coefficient (VAIC™) method is used as the measure to assess the  performance of intellectual capital while factor analysis is used to construct the index of investment opportunity set (IOS). The findings showed that intellectual capital performance as the Value Added Intellectual Coefficient (VAIC), Intellectual Capital Efficiency (ICE), Human Capital Efficiency (HCE) Structural Capital Efficiency (SCE), Capital Employed Efficiency (CEE) have a significant positive effect on investment opportunity set. Since investing on intellectual capital can increase investment opportunities as a result of market value in any company, the outcomes of the current  study are significant for managers aiming to increase the market value of their respective companies.